Education Funding

How Efforts to Fund Schools More Equitably Actually Worsened Racial Inequality

By Evie Blad — September 11, 2025 2 min read
Vector illustration of two hands pulling apart money and it tears in unequal parts.
  • Save to favorites
  • Print

When states overhauled their school funding models to promote equity, they helped narrow the financial gap between high- and low-income districts, but those efforts did not narrow racial and ethnic gaps, a new study finds.

In some cases, differences in funding between largely white and more diverse districts widened. The inequality was most pronounced between states, rather than within them, researchers found, largely because wealthier, less diverse states typically fund their schools at higher levels.

“There’s been a lot of work showing that those reforms did successfully increase equality by student income,” said Emily Rauscher, a sociology professor at Brown University and a co-author of the study, published Sept. 10 in the journal Educational Evaluation and Policy Analysis. “I was expecting that these same reforms would also reduce inequality by race and ethnicity. To my surprise, they did not.”

Because funding for schools is largely generated by property taxes, districts with larger populations of students from low-income households, which often have lower property values, tend to have less local funding per student than districts with wealthier student populations.

States have sought to remedy those disparities by adopting school funding reforms that provide additional money to districts with lower local tax revenue and weighting per-pupil funding to provide additional aid based on characteristics like student disability, poverty, or English-learner status.

Researchers weighed the effects of finance reforms adopted by 40 states between 1990 and 2022. Those changes resulted from court orders in cases challenging the constitutionality of school funding models, legal settlements, ballot issues, and laws passed by state legislatures. The analysis used data from the U.S. Census Bureau and the National Center for Education Statistics to compare districts in the top quintile for child poverty and enrollment of Black and Hispanic students with those in the lowest quintile.

What they found: Across states, the funding-model changes reduced spending gaps between the highest- and lowest-income districts by an average of $1,300 per pupil—sending a bigger share of resources to lower-income districts.

But contrary to researchers’ initial assumptions, the funding gap between districts with the lowest and highest percentages of Black students widened by $900 per pupil following the reforms. Districts with the lowest enrollment of Hispanic students gained an additional $1,000 per-pupil spending advantage over those with the highest enrollment.

Within states, changes to school funding models were most effective at remedying racial and ethnic disparities when those gaps were already relatively narrow, Rauscher said. States with higher enrollments of Black and Hispanic students and more racial and ethnic segregation between districts often had lower per-pupil funding than their less diverse counterparts, researchers found, and changes to their funding models did not help narrow the nationwide disparities.

“What these states’ school finance reforms are doing is really admirable,” Rauscher said. “I think it’s great that state legislators are tackling this issue. What’s going on here is the variation in funding between states.”

Changing those persistent gaps at the national level would require more than state and local efforts, researchers concluded, including a more coordinated effort by the U.S. Department of Education to help level spending among states.

Rauscher discussed the study in this video produced by the American Educational Research Association.

Events

This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Teaching Webinar
Closing the Practice Gap: Essential Insights for Leaders
Three instructional experts will share strategies for making students’ reading and math practice more engaging and impactful this year.
Content provided by Renaissance
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
School & District Management Webinar
The Principal's Role in Collective Efficacy and Student Outcomes
Learn practical strategies that help principals translate their confidence into stronger collective teacher efficacy and student outcomes.
Content provided by Otus

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Education Funding Trump's Education Department Is Letting Tens of Millions of Dollars Expire
Education Week found the agency didn't spend its full budget last year and appears on track to do so again.
10 min read
A collage-style illustration of images of the U.S. Department of Education building, the U.S. Capitol building, and dollar bills on top of a wooden school desktop with a pencil on it and a school bus underneath. The dollar bills appear to have been punched out with a hole punch in a few areas, and those missing circles are sprinkled on the desk and school bus below.
Illustration by Emily Wright for Education Week + Getty
Education Funding From the Feds on Down, School Funding Is Uncertain. What to Know
Federal turbulence during the Trump administration highlights the precarity of state and local funding, too.
7 min read
An illustration of three school leaders at a desk and one is holding an umbrella. They are all looking up into the sky where a sun is peeking through several clouds that are depicting dollar bills.
Illustration by Robert Neubecker for Education Week
Education Funding Trump Cut Their Education Grants. Here’s What Happened Next
Grantees whose work ground to a halt last year lament broken promises and abandoned projects.
15 min read
Dr. Stephanie Cross, a professor at Georgia State University, photographed in her home in Brookhaven, Georgia.
Stephanie Lee Behm Cross, a professor at Georgia State University, stands in her home in Brookhaven, Ga., on July 13, 2026. Cross ran a teacher-residency program funded by a U.S. Department of Education grant until the funding was abruptly terminated in February 2025.
Dustin Chambers for Education Week
Education Funding School Pregnancy Prevention Efforts Shut Down as Trump Emphasizes Abstinence
The administration has canceled funding for more than 50 teen pregnancy prevention programs.
9 min read
Florida SexEd Curriculum 24267748051016
Materials for teens and parents on pregnancy and sexually transmitted infections provided by Teen Health Mississippi are displayed on Sept. 26, 2023, in Jackson, Miss. Dozens of organizations nationwide that ran teen pregnancy prevention efforts had their federal funding abruptly terminated last month.
Rogelio V. Solis/AP Photo